Stocks fall as Huawei ban prompts sell-off in chipmakers

Chipmakers and other technology companies pulled U.S. stocks lower Monday, extending the market's losses into another week.

In this May 13, 2019 file photo, the NYSE logo is displayed at the New York Stock Exchange. [File photo: AP/Mark Lennihan]

The U.S. decision to ban technology sales to China's Huawei hammered the tech sector, particularly chipmakers. About one-third of Huawei's suppliers are American chipmakers and investors are worried that the action against Huawei could crimp sales for companies with revenue heavily tied to China.

Apple also skidded after an analyst warned that the iPhone maker's growth prospects could dim as the U.S. and China continue to spar over trade.

The Huawei ban is adding more anxiety to a market worried about further escalations in the trade war between the U.S. and China. Both sides have recently gone back and forth raising additional tariffs on each other's goods. The uncertainty has put a dent in investor confidence over how Washington and Beijing will resolve their dispute, pulling stocks lower the last two weeks.

"The news that has filtered out of the (Trump) administration is that talks have stalled," said Quincy Krosby, chief market strategist at Prudential Financial. "Nonetheless, the market has held up fairly well given the desire by the market to see a deal consummated."

The S&P 500 has fallen 3.6% so far this month, taking a bit of the shine off a stellar start to the year. The index is still up 13.3% year to date.

On Monday, the S&P 500 lost 19.30 points, or 0.7%, to 2,840.23.

The Dow Jones Industrial Average fell 84.10 points, or 0.3%, to 25,679.90. Apple was the biggest drag on the Dow.

The technology heavy Nasdaq composite slid 113.91 points, or 1.5%, to 7,702.38. The Russell 2000 index of small company stocks gave up 10.80 points, or 0.7%, to 1,524.96.

Major stock indexes in Europe closed broadly lower.

Bond prices fell. The yield on the 10-year Treasury rose to 2.42% from 2.39% late Friday.

Chipmakers led the way lower Monday as traders weighed the implications from the U.S. ban on technology sales to Huawei.

Qualcomm, which gets about 65% of its revenue from China, slumped 6%. Broadcom, which gets nearly half of its revenue from China, also fell 6%. Intel dropped 3% and Xilinx slid 3.6%. An S&P index that measures the performance of chip and chip equipment makers fell nearly 4%.

Apple fell 3.1% after analysts at HSBC cut their price target on the stock, citing renewed risk in the company's growth prospects in China and the potential impact from tariffs. HSBC noted that Apple company could be forced to raise prices, which could hurt demand.

Other technology companies also took losses. Alphabet Inc., Google's parent company, slid 2.1% after it indicated that it would have to cut some features on Huawei smartphones. Other communications stocks also fell. Facebook dropped 1.4% and Comcast gave up 1.7%.

(Story includes material sourced from AP.)